Preparations and Prerequisites for the Introduction … si...Inflation Targeting: International...

Preparations and PrerequisitesPreparations and Prerequisitesfor the for the

Introduction of Inflation Introduction of Inflation Targeting in RomaniaTargeting in Romania

Presentation by Deputy Governor Cristian PopaPresentation by Deputy Governor Cristian PopaNational Bank of RomaniaNational Bank of Romania

NBRNBR--BoEBoE Conference on Conference on ““Inflation Targeting: International Experience and Inflation Targeting: International Experience and RomaniaRomania’’s Prospectss Prospects””

Bucharest, 30 March 2005Bucharest, 30 March 2005

Inflation Targeting: International Experience and RomaniaInflation Targeting: International Experience and Romania’’s Prospectss Prospects

Preparations and Prerequisites for the IntrodPreparations and Prerequisites for the Introduction of Inflation Targeting in Romaniauction of Inflation Targeting in Romania

NATIONAL BANK OF ROMANIA


OutlineOutline1.1. Recap: Context and Initial SpecificationsRecap: Context and Initial Specifications

2.2. Internal PreparationsInternal Preparations

2.1 Organizational issues2.1 Organizational issues

2.2 The Policy2.2 The Policy--Making ProcessMaking Process

2.3 Forecasting2.3 Forecasting

2.4 Communication issues2.4 Communication issues

3.3. Prerequisites for Inflation TargetingPrerequisites for Inflation Targeting

3.1 Absence of Fiscal Dominance3.1 Absence of Fiscal Dominance

3.2 International Comparisons3.2 International Comparisons

4.4. Steps AheadSteps Ahead





1.1. Recap:Recap: Context and Initial Context and Initial SpecificationsSpecifications

•• Inflation targeting mentioned in RomaniaInflation targeting mentioned in Romania’’s Mediums Medium--Term Strategy Term Strategy for Economic Development (2000), confirmed in for Economic Development (2000), confirmed in PEPsPEPs (2002 and (2002 and beyond)beyond)

•• Initial specifications: Initial specifications: •• (i) target specified in terms of CPI; (i) target specified in terms of CPI; •• (ii) mid(ii) mid--point with band (some tolerance for undershooting target); point with band (some tolerance for undershooting target); •• (iii) annual targets w. multi(iii) annual targets w. multi--period perspective (initially two years); period perspective (initially two years); •• (iv) flexible interpretation of inflation targeting (esp. coexis(iv) flexible interpretation of inflation targeting (esp. coexistence w. tence w.

managed float regime); managed float regime); •• (v) existence of few (v) existence of few ex anteex ante defined defined ““exceptionsexceptions”” conditional to conditional to

attaining the target;attaining the target;•• (vi) joint announcement of target with government(vi) joint announcement of target with government





2.1 Organizational Issues2.1 Organizational Issues•• Task force set up to implement the IT framework, led by Task force set up to implement the IT framework, led by

coordinating DGcoordinating DG–– Monetary Policy Department Monetary Policy Department –– Research and Publications Department Research and Publications Department –– Macroeconomic Modeling and Forecasting DepartmentMacroeconomic Modeling and Forecasting Department

•• Development of a detailed quarterly macroeconomic forecasting Development of a detailed quarterly macroeconomic forecasting framework framework –– Centralized databaseCentralized database–– Data monitoring & reportingData monitoring & reporting–– Expectations surveyExpectations survey–– NearNear--term forecasting of key variables term forecasting of key variables –– MediumMedium--term forecasting model, consistent with achieving term forecasting model, consistent with achieving

multimulti--period inflation targetsperiod inflation targets


Conference on Conference on ““Inflation TargetingInflation Targeting””

Preparing the Introduction of Inflation Targeting Preparing the Introduction of Inflation Targeting


QUARTERLY MODEL PROJECTIONS

inflation and relevant variables

Data managementData management

DETAILED MACROECONOMIC DATA

raw historical data for domestic and external variables updated on a regularbasis

near-term forecasts for externalvariables

Central NBR database

Cut

-off

date

NEAR-TERM FORECASTS (NTF)

domestic and external variables exogenous for the core model

Satellite models

NTFs for domestic exogenousvariables (RPD, MPD and MMFD)

External sources

Consensus Forecasts

CURRENT POSITION OF THE ECONOMY (initial conditions for the core model)

equilibrium values for relevant variables and their medium term profile

DATA FOR THE CORE MODEL

Satellite models (MMFD)

Expert judgment

The core model(MAMTF)

3rd party forecasts (surveys)





2.2 The Policy2.2 The Policy--Making ProcessMaking ProcessRole of the NBR BoardRole of the NBR Board

•• Exceptional initial involvement in model specification, startingExceptional initial involvement in model specification, startingconditions (in order to foster ownership/understanding: conditions (in order to foster ownership/understanding: ““successful successful dialogue with the modeldialogue with the model””) )

•• Final decisionFinal decision--making bodymaking body

•• Focuses on how to best employ forecasts in policy making Focuses on how to best employ forecasts in policy making

•• In practical terms:In practical terms:

–– identifies alternative scenarios to consider or special issues tidentifies alternative scenarios to consider or special issues to be o be examined from the viewpoint of strategy (examined from the viewpoint of strategy (‘‘big decisionsbig decisions’’); these ); these are then run through model again for consistency are then run through model again for consistency

–– judges how the path for the policy interest rate should be judges how the path for the policy interest rate should be adjusted to account for uncertainties and risksadjusted to account for uncertainties and risks





Role of the Monetary Policy Committee (MPC)Role of the Monetary Policy Committee (MPC)

•• Institutionalized analytical forum at staff/executive Institutionalized analytical forum at staff/executive management levelmanagement level

•• Critical focus on ensuring that all relevant information is Critical focus on ensuring that all relevant information is brought to bear on the forecastsbrought to bear on the forecasts

•• In practical terms:In practical terms:

–– responsible for reviewing assumptions on initial conditions responsible for reviewing assumptions on initial conditions for the forecasts, including the outlook for exogenous for the forecasts, including the outlook for exogenous variablesvariables

–– reviewing the projections and formulating policy reviewing the projections and formulating policy recommendations for the Board, including analyses of their recommendations for the Board, including analyses of their technical implications technical implications





Quarterly Forecasting & Decision ScheduleQuarterly Forecasting & Decision Schedule

Final projection meetingFinal projection meetingTask ForceTask Force meetingmeetingTT--1818

Start of Forecasting CycleStart of Forecasting Cycle

Discussion & Eventual Adoption of Discussion & Eventual Adoption of ‘‘Inflation Inflation ReportReport’’

BoardBoard meetingmeetingT+6T+6

Discussion of forecasting cycle and Discussion of forecasting cycle and ‘‘Inflation Inflation ReportReport’’

MPCMPC meetingmeetingT+3T+3

Forecasts and Forecasts and ‘‘Inflation ReportInflation Report’’ sent to sent to MPCMPC

‘‘Inflation ReportInflation Report’’TT

Monetary Policy DecisionMonetary Policy DecisionBoardBoard meetingmeetingTT--1010

Forecasts and risk scenariosForecasts and risk scenariosMPCMPC monthly meetingmonthly meetingTT--1515

Initial conditions, equilibrium conditions, Initial conditions, equilibrium conditions, exogenous variables and NTFexogenous variables and NTF

MPCMPC meetingmeetingTT--2323

Initial conditions, equilibrium conditions and Initial conditions, equilibrium conditions and exogenous variablesexogenous variables

Task ForceTask Force meetingmeetingTT--2727

NearNear--Term Forecasts (NTF)Term Forecasts (NTF)Task ForceTask Force meetingmeetingTT--3434

Policy review and decision Policy review and decision BoardBoard regular monthly meetingregular monthly meeting

Policy review and recommendationPolicy review and recommendationMPCMPC regular monthly meetingregular monthly meeting

Other projection detailsOther projection detailsTask ForceTask Force –– Second issues meetingSecond issues meetingTT--5151

Model meeting Model meeting Task ForceTask Force –– First issues meetingFirst issues meetingTT--5757

DetailsDetailsEventEventTimeTime





•• Based on formalized models and expert judgmentBased on formalized models and expert judgment

•• Two types of modeling approaches:Two types of modeling approaches:

–– Estimation approach at the shortEstimation approach at the short--run horizonrun horizon

–– Calibration approach at the mediumCalibration approach at the medium--term horizonterm horizon

•• Final forecast integrates information from shortFinal forecast integrates information from short--term models, term models, mediummedium--term model and expert judgmentterm model and expert judgment

2.3 Forecasting2.3 Forecasting





2.3.1 Near2.3.1 Near--Term Forecasting Term Forecasting FrameworkFramework

•• TwoTwo--quarter horizon at present quarter horizon at present

•• A set of methods (one model approach is risky)A set of methods (one model approach is risky)

•• Economic theory as a basis of analysis, but applied to Economic theory as a basis of analysis, but applied to statistical data (estimation vs. calibration)statistical data (estimation vs. calibration)

•• Tool for simulating the impact of changes in exogenous Tool for simulating the impact of changes in exogenous variablesvariables

•• Used for analysis and for establishing the initial conditions foUsed for analysis and for establishing the initial conditions for r the QFMthe QFM





NearNear--term Inflation Forecastingterm Inflation Forecasting

•• Two methods:Two methods:

•• Expert judgement forecast for CPI componentsExpert judgement forecast for CPI components•• ARMAX model for the main CPI inflation components (ARMAX model for the main CPI inflation components (yoyyoy data,data,

monthly frequency)monthly frequency)•• FoodFood•• NonNon--food excluding regulated and fuel pricesfood excluding regulated and fuel prices•• Services excluding regulated pricesServices excluding regulated prices

Exogenous variables: EUR/ROL and EUR/USD exchange rates, Exogenous variables: EUR/ROL and EUR/USD exchange rates, net wagesnet wages,, regulated prices, fuel pricesregulated prices, fuel prices

•• The forecast presented to the MPC = weighted average of the resuThe forecast presented to the MPC = weighted average of the results lts provided by the two methods (with 0.65 weight given to the ARMAXprovided by the two methods (with 0.65 weight given to the ARMAXmodel)model)





NearNear--term GDP Forecastingterm GDP Forecasting

•• Small semiSmall semi--structural model (structural model (qoqqoq))

•• Behavioural equations for household consumption, gross Behavioural equations for household consumption, gross fixed capital formation, exports, imports and core inflationfixed capital formation, exports, imports and core inflation

•• Exogenous variables:Exogenous variables:

•• EUR/ROL and EUR/USD exchange rates, public EUR/ROL and EUR/USD exchange rates, public consumption, net wagesconsumption, net wages,, regulated prices, fuel prices, 3M regulated prices, fuel prices, 3M EuriborEuribor, euro area GDP, HICP, euro area GDP, HICP

•• OLS and OLS and 22SLS estimation with error correction mechanism SLS estimation with error correction mechanism





2.3.2 Medium2.3.2 Medium--Term ForecastingTerm Forecasting

HistoryHistory

•• Assembling the Model for Analysis and MediumAssembling the Model for Analysis and Medium--Term Forecasting Term Forecasting (MAMTF) started in mid(MAMTF) started in mid--20042004

•• Significant progress achieved, with technical assistance supportSignificant progress achieved, with technical assistance support from from two IMF missions and bilateral exchanges/expert visits with the two IMF missions and bilateral exchanges/expert visits with the Czech Czech National Bank (MAMTF conceived in similar fashion to Czech QPM)National Bank (MAMTF conceived in similar fashion to Czech QPM)

•• Two forecasting dry runs to test MAMTF adequacy and the functionTwo forecasting dry runs to test MAMTF adequacy and the functional al integration of shortintegration of short--term and expert information; currently in second term and expert information; currently in second dry rundry run

•• FirstFirst--pass calibration of MAMTF based on priors discussed by the pass calibration of MAMTF based on priors discussed by the BankBank’’s Board s Board





•• Model open to continuous improvement, while maintaining Model open to continuous improvement, while maintaining the core structurethe core structure

•• Small semiSmall semi--structural calibrated model with a Newstructural calibrated model with a New--Keynesian Keynesian core (ST and MT noncore (ST and MT non--neutrality)neutrality)

•• Economy assumed to converge to wellEconomy assumed to converge to well--defined and stable defined and stable longlong--run equilibriumrun equilibrium

•• Deviations from trends Deviations from trends –– the the ““gapsgaps”” -- reflect cyclical behavior reflect cyclical behavior of the economy, while trends are analogous to steadyof the economy, while trends are analogous to steady--state state values (primarily assessed on inflation neutrality)values (primarily assessed on inflation neutrality)

General characteristics of MAMTFGeneral characteristics of MAMTF





•• Core inflation determined by its structural persistence, agentsCore inflation determined by its structural persistence, agents’’ expectations, expectations, output gap, and import price inflationoutput gap, and import price inflation

•• Output gap or Output gap or ““excess demandexcess demand”” factor determined by its own persistence and real factor determined by its own persistence and real monetary conditions, incl. monetary conditions, incl. ““gapsgaps”” of real (bank) interest rates and real exchange of real (bank) interest rates and real exchange raterate

•• Exchange rate determined according to uncovered interest parity Exchange rate determined according to uncovered interest parity relationship relationship including a risk premiumincluding a risk premium

•• Monetary policy behavior (as implied by flexible inflation targeMonetary policy behavior (as implied by flexible inflation targeting) described by a ting) described by a forwardforward--looking policy interest rate rule that reacts to deviations of ilooking policy interest rate rule that reacts to deviations of inflation from nflation from target, the output gap and excessive interest rate volatilitytarget, the output gap and excessive interest rate volatility

•• AgentsAgents’’ expectations modeled as hybrids of backwardexpectations modeled as hybrids of backward--looking (inertial) and looking (inertial) and forwardforward--looking (looking (““modelmodel--consistentconsistent””) expectations) expectations

Core structure of MAMTFCore structure of MAMTF





•• Low sacrifice ratio (but may vary over time, according to progreLow sacrifice ratio (but may vary over time, according to progress ss of disinflation)of disinflation)

•• Expectations channel quite significant for monetary policy direcExpectations channel quite significant for monetary policy direct t influence on inflation influence on inflation

•• Exchange rate channel also important, especially for speed of Exchange rate channel also important, especially for speed of disinflation (two channels: direct, via passdisinflation (two channels: direct, via pass--through; indirect, through; indirect, through influences on real sector and asset portfolios)through influences on real sector and asset portfolios)

•• Aggregate activity (output gap) channel relatively less effectivAggregate activity (output gap) channel relatively less effective at e at present, but crucial for ensuring continuity of disinflation propresent, but crucial for ensuring continuity of disinflation process cess

•• Monetary policy impulses intermediated by relatively sluggish baMonetary policy impulses intermediated by relatively sluggish bank nk deposit and lending ratesdeposit and lending rates

Specifics of the MAMTF transmission mechanismSpecifics of the MAMTF transmission mechanism





Increasing role of policy rate in influencing inflationIncreasing role of policy rate in influencing inflation

-.008

-.004

.000

.004

.008

2 4 6 8 10 12 14 16 18 20 22 24

R e s p o ns e to a re al inte re s t rate g ap s ho c k

R es p on se of c or e in fl ation to m on etary p ol icy in d u c ed sh ocksS a m pl e: J u n e 1997 - D ec e m b er 2000

Mo nths

0

10

20

30

40

50

60

70

80

90

5 10 15 20

Output gapReal interest rate gap

Real exchange rate gapCore inflation

Variance decomposition of core inflationSample: June 1997 - December 2000

Contributions of shocks(% of total variance)

Months

-.006

-.005

-.004

-.003

-.002

-.001

.000

.001

.002

2 4 6 8 10 12 14 16 18 20 22 24

R e s p o ns e t o a r e al int e re s t r ate g ap s ho c k

R es p o n s e of c or e i n f l at i o n t o m o n et ary p ol ic y in d u c e d s h oc k sS a m p l e: S e p t e m b er 2 0 0 0 - N o ve m b er 2 0 0 4

M o nths

0

10

20

30

40

50

60

70

5 10 15 20

Output gapReal interest rate gap

Real exchange rate gapCore inflation

Variance decom posit ion of core inf lationSample: Septem ber 2000 - Novem ber 2004

Months

Contribution of shocks( % of total variance)





•• Role of nearRole of near--term forecastingterm forecasting–– Covers short end of forecast horizonCovers short end of forecast horizon–– Shapes the initial conditions of the forecastShapes the initial conditions of the forecast–– (In the future) Serves as cross(In the future) Serves as cross--check for final forecastcheck for final forecast

•• Role of expert judgmentRole of expert judgment–– Flexibility of MAMTF allows direct incorporation of expert inputFlexibility of MAMTF allows direct incorporation of expert input (incl. (incl.

surveysurvey--based information)based information)–– Forecasts of effects of anticipated exogenous events (e.g. capitForecasts of effects of anticipated exogenous events (e.g. capital account al account

liberalization)liberalization)–– Forecasts of variables not explicitly modeled (e.g. fiscal stimuForecasts of variables not explicitly modeled (e.g. fiscal stimulus) lus) –– Model forecasts can be Model forecasts can be ““tunedtuned”” if unrealistic if unrealistic

•• Role of mediumRole of medium--term modelterm model–– Integrates all information in a consistent wayIntegrates all information in a consistent way–– Generates an interest rate path which can serve as policy guidelGenerates an interest rate path which can serve as policy guideline ine –– Can be used to generate risk scenarios, analyze consistency of aCan be used to generate risk scenarios, analyze consistency of alternative lternative

scenariosscenarios

2.3.3 The forecasting process2.3.3 The forecasting process





Flow of information in the forecasting process at Flow of information in the forecasting process at the National Bank of Romaniathe National Bank of Romania

Near-term models and expert forecast NTF Inflation, GDP, EUR/ROL etc.

Assessment of initial conditionsand medium-term trends

Exogenous variables forecasts

Trends & Gaps

Medium-term(core)model

Expert judgment

Finalmedium-term

forecast

Anticipated shocks, fiscal impulse, etc.

Near-term forecast

Tuning

Uncertainty





•• Restructuring of the existing inflation reportRestructuring of the existing inflation report

•• Policy made more transparent Policy made more transparent

•• Supporting external communicationSupporting external communication

2.4 Communication issues2.4 Communication issues





•• Plays the central role in the communication strategy under ITPlays the central role in the communication strategy under IT

•• To be published quarterly, reflecting the forecasting cycle; firTo be published quarterly, reflecting the forecasting cycle; first st quarterly report (2005Q1) expected July, also serving to emphasiquarterly report (2005Q1) expected July, also serving to emphasize ze multimulti--period preoccupation for attaining the inflation targetsperiod preoccupation for attaining the inflation targets

•• Based on the same information set used in the forecasting procesBased on the same information set used in the forecasting processs

•• Compared to existing 6Compared to existing 6--month Inflation Reports: (i) more timely month Inflation Reports: (i) more timely publishing; (ii) transparent inclusion of NBR inflation forecastpublishing; (ii) transparent inclusion of NBR inflation forecast, policy , policy decision, detailed risk assessment; (iii) balance favors forwarddecision, detailed risk assessment; (iii) balance favors forward--looking looking analysis over backwardanalysis over backward--looking reporting; (iv) will replace a substantial looking reporting; (iv) will replace a substantial portion of analysis currently included in NBR Annual Reports, soportion of analysis currently included in NBR Annual Reports, some me streamlining of monthly bulletins also a resultstreamlining of monthly bulletins also a result

•• Unpublished draft inflation reports for the two dryUnpublished draft inflation reports for the two dry--run forecasting run forecasting rounds, for purposes of internal analysisrounds, for purposes of internal analysis

2.4.1 The New Inflation Report2.4.1 The New Inflation Report





•• Increased frequency and quality of communication with Increased frequency and quality of communication with public on policy issuespublic on policy issues

•• Prior announcement of calendar for policyPrior announcement of calendar for policy--related Board related Board meetings meetings

•• Press releases on contents of betweenPress releases on contents of between--forecast meetings forecast meetings and on the monetary policy decisionsand on the monetary policy decisions

•• Prior announcement of confirmation of fullyPrior announcement of confirmation of fully--fledged fledged implementation of IT regime, with details on bandwidth, implementation of IT regime, with details on bandwidth, formalized exceptions, etc.formalized exceptions, etc.

2.4.2 Increased Policy Transparency2.4.2 Increased Policy Transparency





•• The NBR website will be reThe NBR website will be re--designed to allow easier access to designed to allow easier access to policy related information and to include background policy related information and to include background information on inflation targetinginformation on inflation targeting

•• Dedicated briefings on benefits of IT and the related policy Dedicated briefings on benefits of IT and the related policy process to be organized process to be organized

•• Brochure series targeted for broader audienceBrochure series targeted for broader audience

•• Background papers to be publishedBackground papers to be published

•• Conferences, interviews, public speechesConferences, interviews, public speeches

2.4.3 Supporting external communication2.4.3 Supporting external communication





-12

-8

-4

0

4

8

1999 2000 2001 2002 2003 2004

Recursive log NBR steriliz. flow estimates± 2 S.E.

-16

-12

-8

-4

0

4

8

12

1999 2000 2001 2002 2003 2004

Recursive log MoF debt issuance <=1Y estim.± 2 S.E.

3.1 Absence of Fiscal Dominance(dep var. IINTER = (BUBID3M + BUBOR3M)/2)

Prerequisites for Inflation Targeting3.





0

20

40

60

80

100

120

1 2 3 4 5 6 7 8 9 10 11 12

IIN T E R L F L U X L V O L M O F

V a ri a n c e D e c o m p o s i ti o n o f I I N T E R

3.2 International ComparisonsCredit to Non-Government*

61.5

23.0

49.3

37.6

16.4

58.2

8.3

23.917.5

71.7

94.4

31.7

113.8112.0

76.0

0

20

40

60

80

100

120 C

Z (1

997)

PL (1

998)

HU

(200

1)

CL

(199

0)

BR (1

999)

MX

(199

9)

IS (1

992)

TH (2

000)

NZ

(199

0)

UK

(199

2)

SE (1

993)

ZA (2

000)

AL (2

004)

**

UA

(200

4)**

RO

(200

4)**

*

percent of GDP

Source: EUROSTAT, NBR, NIS, IMF

*) at the time of shifting to inflation targeting**) intends to adopt inflation targeting

***) to shift to inflation targeting in 2005

Bank Assets*

56.069.1

53.9

127.2104.4

229.0

92.5

49.8 39.4

138.0

38.3

136.0

0

50

100

150

200

250 C

Z (1

997)

PL (1

998)

HU

(200

1)

BR (1

999)

IS (1

992)

TH (2

000)

NZ

(199

0)

UK

(199

2)

ZA (2

000)

AL (2

004)

**

UA

(200

4)**

RO

(200

4)**

*

percent of GDP

Source: Websites of central banks and national statistics institutions

*) at the time of shifting to inflation targeting **) intends to adopt inflation targeting***) to shift to inflation targeting in 2005

Stock Market Capitalisation*

24.1 20.1

45.0 42.9 45.0

24.4 20.0

86.5

160.0

0.917.6

52.6

32.1

12.9

0

20

40

60

80

100

120

140

160

180 C

Z (1

997)

PL (1

998)

HU

(200

1)

CL

(199

0)

BR (1

999)

MX

(199

9)

IS (1

992)

TH (2

000)

NZ

(199

0)

UK

(199

2)

SE (1

993)

ZA (2

000)

UA

(200

4)**

RO

(200

4)**

*

percent of GDP

Source: EUROSTAT, NIS, BSE, RASDAQ


Insurance Premia*

2.0 1.72.5

6.1

1.3

16.9

2.82.92.9 3.5****

0

2

4

6

8

10

12

14

16

18 C

Z (1

997)

PL (1

998)

HU

(200

1)

BR (1

999)

MX

(199

9)

TH (2

000)

SE (1

993)

ZA (2

000)

UA

(200

4)**

RO

(200

4)**

*

percent of GDP

Source: EUROSTAT, Swiss Re, ISC, NIS ****) 2003

*) at the time of shifting to inflation targeting**) intends to adopt inflation targeting

***) to shift to inflation targeting in 2005

Fiscal Surplus/Deficit*

-2.2

-4.4

-9.9

-2.2

-4.4

-6.4

-1.8

-5.4

-11.4

-9.2

-1.1

-3.0

-1.1

0.7

-1.3

– 14

– 12

– 10

– 8

– 6

– 4

– 2

0

2 C

Z (1

997)

PL (1

998)

HU

(200

1)

CL

(199

0)

BR (1

999)

MX

(199

9)

IS (1

992)

TH (2

000)

NZ

(199

0)

UK

(199

2)

SE (1

993)

ZA (2

000)

AL (2

004)

**

UA

(200

4)**

RO

(200

4)**

*

percent of GDP

Source: EIU, MPF, NIS






4.4. Steps AheadSteps Ahead•• Additional scope in data reporting, surveys: integrating Additional scope in data reporting, surveys: integrating

reliable information & expectations regarding housing & reliable information & expectations regarding housing & financial assetsfinancial assets

•• Improvements in nearImprovements in near--term forecasting and integration term forecasting and integration into decisioninto decision--making: ARMAX, expert judgmentmaking: ARMAX, expert judgment

•• Improvements in MAMTF: (i) refining calibration; (ii) Improvements in MAMTF: (i) refining calibration; (ii) adding extra adding extra ““wrinkleswrinkles””; (iii) interaction with additional ; (iii) interaction with additional blocks (satellite subblocks (satellite sub--models): external accounts, fiscal; models): external accounts, fiscal; (iv) extending range to 6 and 8 quarters ahead(iv) extending range to 6 and 8 quarters ahead

•• Transparency & communication: improvements in Transparency & communication: improvements in content of QIR; briefing sessions on regular basis; content of QIR; briefing sessions on regular basis; possible publication of minutes/voting recordspossible publication of minutes/voting records

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